Well, George Osborne delivered his Emergency budget in just under one hour - setting out some predicted changes, especially with regards to income and capital gains taxes.
A quick breakdown of his speech is below:
- From January 4 next year, the main rate of VAT will rise from 17.5% to 20%. The VAT rise will help generate more than £13 billion a year by the end of this Parliament. Zero-rated items will remain exempt from VAT over the course of this Parliament.
- The Government will provide help for low-spending councils in England to freeze council tax for one year from next April.
- Capital Gains Tax remains at 18% for low and middle-income savers but from midnight today taxpayers on higher rates will pay 28%.
- The 10% CGT rate for entrepreneurs which currently applies to the first £2 million qualifying gains will be extended to the first £5 million.
- Personal income tax allowance to be increased by £1,000 in April to £7,475. Some 23 million basic rate taxpayers will gain up to £170 a year. We have included this change in our forecast 2011/2012 Tax Calculator.
- The higher rate income tax threshold will remain frozen to 2013/14, with a long-term objective to increase the personal allowance to £10,000.
- Tax credits will be reduced for families earning over £40,000 next year, the taper rate at which awards are reduced will be increased, the baby element will be removed for new children from April 2011 as will the one-off payment to new workers over 50 from April 2012.
- The Government is asking public sector workers to accept a two-year pay freeze, with protection for the 1.7 million public servants earning less than £21,000. Those low-paid workers will receive a flat pay-rise worth £250 in both years.
- The Government will accelerate the increase in state pension age to 66.
- The OBR says unemployment will peak this year at 8.1%, then fall each year to reach 6.1% in 2015.
- The OBR today forecasts that by 2015/16, we will be spending over £10 billion a year to meet the gap between pension contributions and payments to the unfunded pensions they support.
- From next year - with the exception of the state pension and pension credit -benefits, tax credits and public service pensions will rise in line with consumer prices rather than retail prices, saving over £6 billion a year by the end of the Parliament.
- The Government will introduce a medical assessment for Disability Living Allowance from 2013 for new and existing claimants.
- Housing Benefit will be reformed with a maximum limit of £400 a week, in a package saving £1.8 billion a year by the end of the Parliament.
- The total welfare shake-up will save the country £11 billion by 2014/15.
- OBR forecasts show growth in the UK economy for the coming five years estimated to be 1.2% this year and 2.3% next year; then 2.8% in 2012, followed by 2.9% in 2013; then 2.7% in 2014 and 2015.
- Consumer Price Inflation is expected to reach 2.7% by the end of the year, before returning to the 2% target in the medium term.
- Growth predicated to be lower than forecast at 1.2% this year.
- Borrowing to fall to 1.1% of GDP by 2015.
- Mr Osborne said his Budget today implies further reductions in departmental spending of £17 billion by 2014/15, with unprotected departments facing an average real cut of around 25% over four years.
- The Government will create a Regional Growth Fund to provide finance for regional capital projects over the next two years and for the next three years anyone setting up a new business outside London, the South East and the Eastern region will be exempt from £5,000 of NI payments for the first 10 workers.
- From April 2011, the threshold at which employers start to pay National Insurance will rise by £21 per week above indexation.
- Corporation Tax will be cut next year to 27%, and by 1% annually for the next three years, taking it down to 24%.
- The small companies' tax rate will be cut to 20% from the current 21%.
- Reform of the corporate tax regime "..will help re balance the economy away from household debt and government consumption", said the Chancellor.
- From January 2011, the Government will introduce a bank levy, which will apply to the balance sheets of UK banks and building societies and the UK operations of foreign banks.
- Smaller banks will not be liable for the levy, which when fully in place is expected to raise over £2 billion per year.
Alcohol and cigarettes
- No new increases in duties on alcohol, tobacco after the "substantial increases" announced in Labour's March Budget.
- Labour's plan to increase the duty on cider by 10% above inflation will be scrapped from the end of this month.
- No new increases on duty, although VAT will have an effect at the pumps from January.
- The Government will look at how to dispose of its shareholding in air traffic body NATS
- The Government will commit to the upgrade of the Tyne and Wear Metro, extension of the Manchester Metrolink, redevelopment of Birmingham New Street station, improvements to the rail lines to Sheffield and between Liverpool and Leeds.
- Tax relief for the video games industry will be scrapped.
- The Chancellor said he recognised "..particular pressures on our education system and on defence..", and final departmental settlements will be set in the spending review to be presented on Wednesday October 20.
- UK not joining the euro in this Parliament, and euro preparation unit in the Treasury disbanded.
- Labour's landline tax will be abolished and instead the Government will support private broadband investment with funding in part from the digital switchover under-spend within the TV licence fee.
- With the full agreement of the Queen, the Civil List will remain frozen at £7.9 million for the coming year and a new means of support for Her Majesty will be proposed at a later date.